Congress reaches payroll tax deal

After a turbulent day of negotiations, the two top tax writers in Congress announced early Thursday morning that they reached a bipartisan deal to extend tax cuts and jobless benefits affecting millions of Americans.

Senate Finance Committee Chairman Max Baucus (D-Mont.) and House Ways and Means Committee Chairman Dave Camp (R-Mich.) emerged from a Capitol meeting room to say the agreement — hashed out by a bicameral, bipartisan conference committee — would garner enough support to move forward in both chambers.

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“Sen. Baucus and I are here to say that we have reached an agreement,” Camp said, with Baucus by his side.

They declined to discuss the details of the compromise, but it would extend for 10 months both the 4.2 percent Social Security payroll tax rate and unemployment benefits, and it would forestall a sharp decrease in payment cuts to physicians servicing Medicare patients.

An array of measures would finance the program, including spectrum auctions, cuts to an Obama health care program and requirements that federal workers pay more into retirement benefits — all issues that provoked controversy Wednesday.

But the $100 billion cost of the payroll tax cut would be added to the budget deficit, a significant concession by GOP leaders that has provoked opposition on the right.

The two men said that the bill was being combed over by Congress’s legislative lawyers, and there were “technical issues” that needed to be ironed out before a formal bill could be introduced in either chamber. But they also said the agreement would garner a majority of lawmakers on the conference committee, allowing it to move for floor action in the House and Senate. Votes are unlikely to come before Saturday.

The lead-up to the agreement had the Capitol frozen with uncertainty.

After both sides said there was an deal Wednesday afternoon, a snag emerged in the evening over a proposed increase in pension payments for federal employees that would raise $15 billion to pay for part of the agreement. A deal was reached when negotiators agreed to include language forcing new federal hires to pay more into their pensions than current workers.

Those problems came after congressional negotiators ran into another unexpected problem: Senate Republicans refused to endorse a bipartisan agreement over the payroll tax cut.

President Barack Obama, who was on a trip to Milwaukee and Los Angeles on Wednesday, called Sen. Ben Cardin (D-Md.) and Rep. Chris Van Hollen (D-Md.), who both represent hundreds of thousands of federal employees. Van Hollen insisted to Obama that current federal employees not be affected by the pension changes, a Democratic aide said.

Cardin’s concerns were echoed by House Minority Whip Steny Hoyer, another Maryland Democrat. Hoyer met with Boehner’s chief of staff, Barry Jackson, late Wednesday. And when he left the Capitol, Hoyer said he was fighting over the federal pensions’ copay provision and was advocating for a change in the cost-of-living adjustment in its place.

Asked why the issue popped so late, Hoyer said, “There wasn’t an agreement, there were outlines of an agreement until just about 48 hours ago.”